How to Avoid and Prevent Credit Card Chargebacks
An understanding of how to minimize the occurrence of charge backs in your business.

How to Avoid and Prevent Credit Card Chargebacks

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Preventing Chargeback: Increase Profits for your Online Store

Your online business sells products that Dropshipper Supplier ships to customers. The problem is that during the shipping process, either you or the customer must periodically check the status until the shipment is confirmed.

Sources of Human Error
1. Incorrect customer address.
2. A changed order from the customer after shipment.
3. The supplier gives incorrect details to the shipping company.
4. The shipping company fails to honor the customer’s arrival date request.
5. The tracking number is given to you from the supplier, and then from supplier to customer.

Shipping Mistakes
17% of shipping orders are met with mistakes, and, when these problems occur, customers will want a chargeback, which charges 14% of the rate for the merchant. Only 2% of chargebacks are allowed per month by payment providers, and when a merchant goes over this amount, the payment provider will block all incoming payments in that month, causing the merchant to never see the money again. This issue is the cause of 50% of closed online businesses.

The Solution: an Automated Dropshipper Management System

1. The supplier receives a message about the order.
2. The supplier prints a shipping label and hands it to the shipping provider.
3. Both the customer and the supplier receive an automatic email about the item being shipped.
4. Both the customer and the supplier receive a package tracking number.
5. Once the customer receives an item, the order is automatically closed in the supplier system.
6. With these benefits, customer dissatisfaction and chargeback is reduced to 5%.

Reasons for 1% of the remaining 5%
  • 2% chargeback rate
  • Customer dissatisfaction with the service/product.
  • Mishap between merchant name in the credit card/bank statement and the store name.
  • Customer service information of the merchant is unavailable.

  • How to Decrease the Occurrence of These Issues
    In order to lower the amount of mishaps that occur, you need to maintain a high level of customer service and quality products. In addition, make sure the name on the charge is the store name, and, in the case of a customer complaint, return the payment before they ask for it.

    The Remaining 4% Chargeback Rate: Fraud
    The top 4 red flag signs of fraud are:
    1. The order is higher than the average sale.
    2. The customer has not received the order yet but has made an additional one.
    3. The order has a different billing and shipping address.
    4. Multiple orders are made to the same address but with different credit cards.
    It is important to speak directly on the phone with your customer if you have doubts.

    Ways to Prevent Chargeback in an Online Business

    To save your business from ruin and prevent chargebacks, make sure to have good customer service and good quality products. In addition, consider using an automated dropshipper management system to reduce manpower and prevent chargeback by 15%. Also, be sure to refund payments to complaining customers before they make a chargeback and use more than one payment provider to prevent getting your income funds blocked. Lastly, look out for fraud and if you are unsure about an order, ask to speak with your customer to confirm your suspicions.

    Preventing chargeback can be one of the most beneficial ways to aid your online business in achieving success. It saves time and money in the long run, and lets you avoid the nightmare of having to shut down your online store.

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